ServiceNow Inc at Goldman Sachs Communacopia + Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : What is your most audacious goal for ServiceNow? Long term, if you were to come back to the Goldman Sachs 2027 conference, what does ServiceNow look like? I'm not asking about revenue guidance. We know that, right? But how would you like ServiceNow to look like, to be known as? And how do you get there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 14, 2022 / 8:15PM, NOW.N - ServiceNow Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Amazing. Yes, one of the things I'd recall is when I spent time with you, I came out inspired that I could just go take on any challenge. And I know you and I discussed a challenge that you pushed me to do, and I did accomplish that. And I have said, I would not have done it had I not been inspired by Bill. So now let's move to technology, workflow technology. I mean what is this workflow technology? Because I grew up and you and I grew up in the time that apps were developed using a database. You bought a database server, an application server, development tools. And you spent 6 to 9 months building these things. Now you guys have been talking about workflow-based technology to build new applications. And yes, you have a new friend, Satya Nadella, talked about -- he proclaimed 75% of apps will be built using no-code, low-code technology. So there's some agreements, some consensus, trying to build here. And I've already heard people say, hey, is it 500 million applications in the backlog? Another person said, well, I heard it's 750 million. Maybe it's coming from Bill McDermott. So are you the man propagating the 500 million applications in the backlog? If so, what exactly gives you the conviction that this is the new way we're going to be building applications? Why not go back to the old ways?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Congratulations.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : It is bigger on my part.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Winners Dream.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : I have a story that I cannot discuss in public. But why not? Why not? I think you inspired, with that why not, somebody that we both know that absolutely did the unthinkable. We'll discuss that offline, but you can guess who that is. So I like your why not. So Bill, give us an example. So this workflow technology is so good. Can you think of some mission-critical applications that were built using the ServiceNow workflow that we can look at and say, hey, this is a pretty decent validation of Bill's vision?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Those are extremely diverse use cases but united by one common underlying technology. Really interesting. I want to go back to your core products, ITOM, ITSM. A question that I get is, how much more room to run? I mean where are we in the adoption cycle? Is this not the case of one day, we're going to wake up and say, "Oh, it matured," right? But what do you think of that statement that we don't have that much of a runway? And if we do have a runway, what is the reason for your conviction that it's a long runway?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Still too low?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : I know that you are way ahead of your time when it came to diversity, equity, inclusion. Back in 2006, 2007, somebody that you and I know, somebody that may be my family, you had this idea that women in executive leadership is a possibility. You have this amazing program, which is not even relevant to ServiceNow. It was -- but as you talked about this program, I'm reminded by the -- of the 2 women you picked up and trained, and one of them is still working with you. And the other one, identity will not be named due to conflict of reasons, but that was 15, 16 years back.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : I had a fabulous opportunity to listen to President Obama and actually meet him last week. And this is exactly what he said, "Listen to diverse opinions, makes the decisions richer."

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : The next one I wanted to ask you, the products that you announced at your user conference, ServiceNow Knowledge, what has been the customer response to some of the new offerings when you have these discussions?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Let's talk about -- I know you talked about ITOM and ITSM, then moving on to employee and customer workflows. It's off to a great start. Are you seeing -- what kind of potential do you see ahead for these 2 workflows? Could they become multibillion-dollar businesses long term?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Creator Workflow. That's the -- every application software company has one -- has at one point in time with their life tried to be a platform company. And it's -- the success rate is pretty mixed. How do you make Creator Workflow, which is a customer applications development platform but based on workflow technology? What -- I'm curious, what have you learned from the other companies and how you plan to apply that to make Creator Workflow potentially also a multi-billion dollar product?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : There was a concerning thing that you said, 80% of digital transformation projects don't achieve their full potential. But if that's the case, then should investors be concerned that this is a secular trend? Because we're all hoping that this transformation thing really is a big tailwind for us.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Not even Microsoft? When you think of them, the Power Apps and the workflow platform?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Great. I know you like to talk to customers. I like meeting with our customers and clients. In fact, this is the largest gathering of our clients that I've been in front of with their management. So thank you, once again, this is an incredible, incredible outcome. But the Fed is on a mission to wreck this party. They've already wrecked the party. Rates are going up. Who knows? It's 50, 75 bps. They go up again. We need to speak with your customers. How sensitive are they to the idea of rates? What are they doing with their ServiceNow book of business or whatever they intend to do? Is that changing their plans or not so?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : A couple of brethren software companies noticed perturbations in their pipeline. I think Workday, Snowflake, we've seen so many companies. It's hard to keep their name straight over the last couple of days. And then there may be adjustments in their pipeline close rates or something. They came out swinging. There was a learning curve in adapting to possibly higher cost of financing, et cetera. You guys did the right thing, too. I mean you cautioned us back in late July that, hey, we're starting to see some effects. So how comfortable do you feel that you have dialed in the right set of assumptions and that you have achieved some level of normalization? Or maybe that is a bit of a stretch?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Think of some of the companies now. So... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 14, 2022 / 8:15PM, NOW.N - ServiceNow Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Wonderful. In the 2 minutes that we have, the precious 2 minutes, shall we do a pause just to see if anybody has a question? And whoever asks a question, drinks on me at 6:00 as usual. Do you see an old friend of ours there? I have a photo of the 3 of us actually, some shot from 8 years back or so. Anybody with a question, just raise your hand, and I'll give you -- oh, there is a question. Okay. Or not, maybe. You're just moving with the microphone. So I wanted to go down the technical deep end. DevOps, you have a play there in DevOps. There are publicly held companies, Datadog, Dynatrace, Splunk, et cetera, seems like Elastic as well, seems like a crowded marketplace. But at the same time, every one of these CEOs that presented from these companies say that TAM is growing, and it's not really as competitive as we think. What are your observations on DevOps? Is there something to do there for ServiceNow?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Partnerships, sort of. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 14, 2022 / 8:15PM, NOW.N - ServiceNow Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : I have one final question before you might actually run into somebody you might know, that will be the CEO of Disney, who's the next person on stage. Yes. He'll be joining us in about 3 or 4 minutes. That will be moderated by my friend, Brett Feldman, who covers -- he should be here. But in the next 30 seconds, the role of M&A. At this time, assets look really attractive. What are you thinking?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Wonderful. On that note, a round of applause for Bill McDermott. Thank you.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Once again.